Hong Kong government released an additional HK$16.8 billion ($2.2 billion) stimulus plan on Tuesday in order to boost the local economy and counter the impact of the global financial downturn.
Financial Secretary John Tsang said at a press conference that the relief package will include income tax rebates, waivers on business registration fees and increased allowances for public housing tenants, students, the elderly and the disabled.
The new measures expand upon those announced in February's budget and increase Hong Kong's stimulus spending to $87.6 billion, about 5.2% of the territory's gross domestic product, the Financial Secretary Tsang said.
He said the HK$16.8 billion package, combined with previously announced measures wound improve our GDP figure by about 2.0% this year and predicted the economy would improve in the second half of the year.
In the third quarter of 2008 Hong Kong tumbled into recession and in May the government slashed its forecast for this year, saying the economy would contract 5.5-6.5 per cent, from a previous forecast of 2.0-3.0 per cent.
On Tuesday, government figures showed Hong Kong's exports plunged last month, dropping 18.2 per cent year-on-year for April and nearly 21% over the first four months compared with 2008.
The city's jobless rate increased to 5.3% in the three months ending April, the highest level in three years.
By now, the slowdown has spilled over to the domestic economy and thus the government needs to expand the size of the stimulus package to compensate for the lost time, said Kevin Lai, senior economist at Daiwa Institute of Research.
Hong Kong’s Gross domestic product tumbled at its fastest rate in a decade in the first quarter of this year, plunging 7.8% from a year earlier.